Financial Management

Explain the various approaches to calculate cost of equity with help of examples.

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Introduction The cost of equity represents the return that investors expect for investing in a company’s equity. It is a critical component in financial management, particularly in capital budgeting and valuation. Several models are used to estimate the cost of equity, each with its own assumptions and inputs. This article explains the major approaches to […]

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Discuss with suitable examples various types of risks involved in capital budgeting decisions.

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Introduction Capital budgeting is the process of evaluating and selecting long-term investments that are consistent with the goal of the firm’s wealth maximization. However, these decisions involve significant risks due to uncertainties in future cash flows, project life, and external factors. Understanding various types of risks involved in capital budgeting is crucial for effective financial

Discuss with suitable examples various types of risks involved in capital budgeting decisions. Read More »

Discuss NPV method for making capital budgeting decisions with suitable examples.

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Introduction The Net Present Value (NPV) method is one of the most widely used techniques for evaluating investment and capital budgeting decisions. It considers the time value of money and provides a clear indication of whether a project will generate value for the firm. This article explains the NPV method, its process, benefits, and includes

Discuss NPV method for making capital budgeting decisions with suitable examples. Read More »

What is capital asset pricing model and arbitrage pricing theory? Differentiate between them.

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Introduction The Capital Asset Pricing Model (CAPM) and Arbitrage Pricing Theory (APT) are two widely used models in financial management for determining the expected return on investments and assessing risks. While both models aim to price assets considering their risk, they are based on different assumptions and methodologies. This article explores the concepts of CAPM

What is capital asset pricing model and arbitrage pricing theory? Differentiate between them. Read More »

Briefly discuss the function of accounting.

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Introduction Accounting is often referred to as the language of business. It involves the systematic recording, reporting, and analysis of financial transactions of a business. Its primary function is to provide accurate and timely financial information that supports decision-making, planning, and control within an organization. Main Body Functions of Accounting 1. Recording Transactions This is

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